Paying £500 million more a week for drugs post-Brexit is based on a fairly extreme scenario
7th Nov 2019
The UK could pay £500 million more per week for drugs following a post-Brexit trade deal with the USA.
It’s certainly possible that drug prices could increase following a trade deal as this fits with US priorities from past negotiations. But the £500 million figure is a rough calculation based on a scenario that the Nuffield Trust has said is fairly extreme.
This week the Labour party tweeted a spoof image of the now famous battle bus used by Boris Johnson during the 2016 EU referendum. The text on the bus has been edited and replaced with the text:
“We’ll send Trump £500 million a week. Let’s fund US drug firms, not our NHS”.
Jeremy Corbyn expanded on this at an election campaign event in Harlow when he said:
“[Boris Johnson] stood in front of a bus in 2016 and promised £350 million a week for the NHS.
“Now we find out that £500 million a week could be taken out of the NHS and handed to big drugs companies under his plans for a sell-out trade deal with Donald Trump and the USA.”
It's a line that other Labour MPs have also used. Shadow health secretary Jonathan Ashworth tweeted last week that “Under Johnson’s plans our NHS will be forced to pay £500 million a week to US corporates for drugs.”
It is possible that drug prices for the NHS might increase following a post-Brexit trade deal between the UK and the USA, as this fits with US priorities from past negotiations. But it’s not possible to say what this will look like with any certainty. The £500 million figure quoted by Labour is a rough calculation based on a scenario that expert body the Nuffield Trust has said is fairly extreme.
Presenting this figure as if it’s certain, as some versions of this claim have done, is misleading and unjustified.
It’s also unlikely that, even if drug prices did increase by that amount, that the money would all go to US firms, as has been suggested.
Increased drug prices are a possible outcome of a post-Brexit US-UK trade deal
Back in June when this suggestion was first put forward the Nuffield Trust health think tank said: “A trade deal would not have the power to stop the NHS being a free, universal service.”
It points out that trade deals don’t aim to “redesign the funding of public services” and that previous trade deals between the USA and countries with publicly-funded healthcare haven’t done this.
It also points out that US companies already have the right to bid for private contracts in the NHS in England. The rules that allow this don’t apply in Scotland and Wales in the same way because they don’t run their health services on the basis of contracts.
What may be more likely to happen, and what Jeremy Corbyn seems to have been referring to in his speech, is that a trade deal could affect the prices the NHS pays for drugs.
At the moment, there are initiatives in the UK which allow medicine prices to be bargained down or for costs to be recovered, so drugs can be purchased here more cheaply than in the USA. Another reason for this is that national bargaining like this is banned there.
The Nuffield Trust says that“Pushes for countries to go easier on medicine prices have been a significant feature of recent US trade negotiations.”
In February, the USA published its negotiating objectives for any future trade deal. This included a desire for “procedural fairness for pharmaceuticals and medical devices”.
Depending on the type of deal, the NHS could change the types of drugs it uses or there could be changes to the way the NHS and Department of Health and Social Care can bargain on prices. The Nuffield Trust told us that drug-pricing works across all four nations, so any changes to this would apply throughout the UK.
The £500 million figure is not an accurate calculation
The figure, calculated by academics from Harvard, the World Health Organisation and Liverpool University, is based on how much more is paid for drugs per person in the USA than in the UK.
According to the latest figures from the Organisation for Economic Cooperation and Development, in 2017 the UK paid roughly $470 per person while the USA paid $1,220. That’s around two and a half times as much.
The NHS in England spent around £18 billion in total on drugs in 2018/19. If per person spending increased by around two and a half times following a US trade deal then that number would be £45 billion. That’s an increase of £27 billion or about £519 million per week.
As we’ve said already it’s certainly possible that drug prices could increase. But the Nuffield Trust told us:
“[The £500 million more a week figure] represents a fairly extreme scenario, although it illustrates a genuine concern.
“If you look at other countries that have concluded a trade deal with the USA containing provisions on medicines, they have not experienced increases in pharmaceutical spending to the same level per person. In fact the gap with Australia has not closed at all.”
Dr Andrew Hill, who was involved in developing the calculation for Dispatches, told the programme:
“I think there is very little understanding about just how high US drugs prices are and how these trade negotiations could lead to these high drug prices. Donald Trump has said he wants to see higher drug prices for foreign governments. I don’t think people have any idea how much money is involved here.”
In a statement to Dispatches the Department for International Trade said:
“The NHS is not, and never will be, for sale to the private sector, whether overseas or domestic…The sustainability of the NHS is an absolute priority for the government. We could not agree to any proposals on medicines pricing or access that would put NHS finances at risk or reduce clinician and patient choice.”
It’s not possible to say exactly how much UK drug prices could change post-Brexit without seeing the draft text of an agreement between the US and UK. Even so, presenting as certain what is in reality a rough estimate based on an extreme scenario is misleading and unjustified.
Even if UK drug prices did increase by the amount suggested by Labour and the Dispatches programme, this doesn’t mean all this money would suddenly be paid to US drug companies. There are a number of UK-based pharmaceutical companies such as GSK and AstraZeneca which already work with the NHS who would presumably still compete on the market.